FTI'sTanit keeps faith in exports, urges NCPO to hold diesel price

Erich Parpart

The Nation June 12, 2014 1:00 am

The export sector remains a major contributor to the country's economic growth, while the National Council for Peace and Order (NCPO) should maintain the price of diesel at the current level for one year instead of just a month, the vice president of the Federation of Thai Industries (FTI) said yesterday.

Tanit Sorat, who is also president of V-Serve Logistics, said the export sector was still important for the Kingdom's growth, as the effects of the NCPO's plans to stimulate the economy by increasing domestic consumption and investment remained uncertain.

"Potential for growth in gross domestic product this year is definitely better because of the increase in economic certainty, but the growth level is still dependent on the export sector and the effectiveness of the NCPO's immediate economic policies," he said.

Tanit agrees with the NCPO's plan to accelerate overdue payments to farmers under the rice-pledging scheme - a move he believes will help stimulate domestic consumption - but is worried that its effect on domestic investment will be minimal if the money does not get into the hands of the farmers.

"If the money being injected into the economy falls to the middlemen and creditors, who already have money, they will put it into savings and the money will not grow. But if most of the money actually falls into the hands of the farmers, who are at the grass roots, they will spend and invest it," he explained.

The FTI vice president added that he now expected economic growth of between 2 and 2.2 per cent this year if the money being injected into the economy boosted domestic consumption and investment, and if the export sector managed to expand by 3.5 per cent.

His projection is in line with the Thai Chamber of Commerce's GDP growth prediction of 2-2.5 per cent at the beginning of the month.

For next year, Tanit believes GDP will grow by more than 3 per cent on increased public-sector spending, continued recovery in the export sector due to a global economic recovery, and increased domestic consumption and investment - along with a lower growth base from this year.

In regard to the NCPO's decision to maintain the price of diesel at Bt29.99 per litre for one month, he said he agreed with the policy but believed the price should be maintained at this level for a full year to ease operators' production costs and boost consumer purchasing power.

"The rising cost of production, along with falling sales, is creating a liquidity problem for business operators.